Gold prices dipped on Friday and were set for a third straight weekly drop, as investors fretted about more rate hikes by the U.S. Federal Reserve after a slew of strong economic data.
Spot gold was down 0.6% at $1,827.09 per ounce, as of 0548 GMT, after earlier falling to its lowest since early January. Bullion has fallen about 2% so far this week. U.S. gold futures slipped 0.9% to $1,835.70.
Gold is considered an inflation hedge, but higher interest rates increase the opportunity cost of holding non-yielding bullion.
This week’s data showing stronger U.S. retail sales and high consumer prices “seems to be fuelling a reassessment… markets think the Fed will go into a more hawkish setting, and that is very bad for gold,” said Ilya Spivak, head of global macro at Tastylive.
Real interest rates have rebounded against this backdrop, so non-yielding gold has been down, Spivak said.
Several Fed officials this week echoed that the monetary policy needed to remain tight to bring inflation down to the central bank’s 2% target.
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